Venture Minerals plans to restart operations at the Riley iron ore mine in Tasmania after a pre-feasibility study showed $31 million of potential cash generation.
The company previously mined at the project in 2014, but suspended operations the same year due to low iron ore prices.
Its pre-production capital expenditure (capex) is estimated at a relatively low $3.6 million due to existing works, including a granted mining lease and 90 per cent of processing plant equipment still on hand.
Venture managing director Andrew Radonjic said the company was well placed as it moved from explorer to producer.
“The Riley iron ore mining study demonstrates the delivery of an exceptional internal rate of return in excess of 300 per cent is possible by leveraging the relatively small capex required to commence production,” Radonjic said.
“Venture has brought together an experienced team with a blend of local knowledge that has built, managed and operated iron ore and other similar-sized projects, thereby de-risking the execution phase of the Riley project.”
Venture has also signed a full off-take agreement with Prosperity Steel for 100 per cent of production in the first two years. The first shipment of ore from is expected in the fourth quarter of 2019.
All of the resources at the mine are located at or near surface, with iron ore price currently at US$91.16 ($135.37)/tonne.
The project is 10 kilometres from the Mount Lindsay Deposit in Northwest Tasmania, less than two kilometres from a sealed road that accesses existing rail and port facilities.
“The Riley iron ore mine will create 80 to 100 jobs and will be a boost for the economy of the West Coast of Tasmania,” Radonjic said.